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RMIN 4000 Exam 2 Brown
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RMIN 4000 Exam 2 Brown
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RMIN 4000 Exam 2 BrownPrivate insurance industry in 2016 - -US insurance industry employed 2.6
million people and insurers had $20.5 billion in premium taxes
- Major types of private insurers - -Stock Insurers
Mutual Insurers
Lloyds of London
- stock insurer - -a corp. owned by stockholders, objective is to earn profit
for stockholders by increasing the value of the stock and paying dividends
(examples: Allstate, Metlife, Progressive, Aetna, Chubb, Travelers)
- mutual insurers - -a corp. owned by policyholders, profits are distributed
to policyholders by dividends or rate reductions (examples: Statefarm,
Northwestern Mutual, Nationwide, New York Life, Liberty Mutual)
- 3 forms of mutual insurers - -advance premium mutual, assessment
mutual, fraternal insurer
- advance premium mutual - -insurer does not issue assessable policies
- assessment mutual - -insurer has right to assess policyholders an
additional amount if the insurer's financial operations are unfavorable (if the
company doesn't make enough money by the end of the year, they can
charge you extra)
- fraternal insurer - -Provides life and health insurance to members of a
social or religious organization
- Lloyd's of London - -world's leading market for members to write
specialized lines of business, NOT an insurer (ex: Amazon would use multiple
syndicates among different lines of insurance who split the risk among them)
(How the Lloyd's market works video, JLO insured her butt)
- Lloyd's brokers - -represent policyholders to arrange coverage with
syndicates
- Lloyd's Syndicates - -offer insurance contracts in the market (sort of
similar to NYSE), must meet Lloyd's stringent capital requirements
- Lloyd's managing agents - -manage the syndicates, who typically
specialize in certain lines
, - Lloyd's underwriters - -work for the syndicates to assess risks and
determine premiums
- Lloyd's members - -provide capital to the syndicates, receiving profits or
bearing losses, most are corp. or limited partnerships, "names" are high net
worth individuals
- Insurance agent - -someone who legally represents the principal
(insurance company) and has the authority to act on the principal's behalf,
and the principal is legally responsible for all acts of an agent when the
agent is acting within the scope of authority
- insurance binders - -provide temporary insurance until the policy is
actually written (can't drive car off lot when buying without one)
-Can typically be provided by P&C agents
-Life insurance agents usually have no authority to issue binders because it
takes time to issue a life insurance policy
- insurance broker - -someone who legally represents the insured and
solicits applications and places coverage with the appropriate insurer, is paid
commission from the insurer, and in general, does NOT have the authority to
bind
- large brokerage firms - -very important in commercial P&C coverage, may
have knowledge of highly specialized insurance markets, may provide risk
management and loss control services (Aon, Marsh & McLennan, Willis
Towers Watson, and Arthur J. Gallagher & Co.)
- surplus lines broker - -licensed to place business with a non-admitted
insurer
- surplus lines - -refer to any type of insurance for which there is no
available market within the state, and coverage must be placed with a
nonadmitted insurer
- non-admitted insurer - -an insurer not licensed to do business in the state
- distribution-independent agency - -usually represents several unrelated
insurers, agents are paid a commission which varies by the line of insurance,
the agency owns the expirations or renewal rights to the business, and
agents may be authorized to adjust small claims and may provide loss
control services to their insurers
- distribution-exclusive agency system (captive agents) - -NOT related to
captive insurance, agent represents only one insurer or group of insurers
under common ownership, are generally paid a lower commission rate on
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